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The 50 Most Expensive Towns in America

Tendayi Kapfidze

Tendayi Kapfidze is Chief Economist at LendingTree. He leads the company’s analysis of the U.S. economy with a focus on housing and mortgage market trends. Tendayi utilizes data analysis to be a resource for both consumers and...

Town life is often stereotyped as simple, idyllic and inexpensive when compared with big-city life — but this doesn’t always ring true. In fact, there are quite a few instances where towns are even more expensive than the cities they’re near.

To take a look at how expensive town life can get, LendingTree, the nation’s largest online loan marketplace, ranked the 50 towns in the United States with the most expensive median home values. Our study also looks at the median income in these towns to determine how attainable homeownership is for the average person living there. What we found: The towns with the most expensive home prices are unaffordable to median income earners who live in those areas.

Ultimately, our study indicates that people who live in towns can experience the same kinds of issues related to housing affordability and wealth inequality as city dwellers. In some cases, these issues can be even more prevalent in towns than in cities.

Key findings

Vineyard Haven, Mass., Summit Park, Utah, and Breckenridge, Colo., are the three most expensive towns in the country. Each of these towns is known for its proximity to natural features like mountain ranges or the ocean. While high levels of wealth tend to pool in these towns, the majority from these areas make an income well under the national household average.

The majority of the towns featured in this study are unaffordable for the median income earner living in them. Both renting and owning a home are out of reach for median income earners in 42 of the 50 towns looked at in this study. This suggests that many people who work in the towns featured in these studies don’t necessarily live there, and instead commute.

As our study makes clear, living in a small town does not necessarily make the cost of living more affordable. Many people living in the towns featured in our study would have an easier time affording a home in a major metropolitan area than in their current area. That being said, some of these towns are still relatively affordable like Los Alamos, N.M. or Gillette, Wyo.

Most expensive towns

No. 1: Vineyard Haven, Mass.

Total population: 17,321

Median individual income: $39,045

Median home value: $674,600

Affordable housing costs for a median income earner: $911

Calculated mortgage payment for a median priced home: $2,767

Median rent payment: $1,441

Home affordability deficit: -$1,856

Rent affordability deficit: -$530

No. 2: Summit Park, Utah

Total population: 41,349

Median individual income: $41,654

Median home value: $558,300

Affordable housing costs for a median income earner: $972

Calculated mortgage payment for a median priced home: $2,290

Median rent payment: $1,230

Home affordability deficit: -$1,381

Rent affordability deficit: -$258

No. 3: Breckenridge, Colo.

Total population: 31,004

Median individual income: $31,611

Median home value: $547,700

Affordable housing costs for a median income earner: $738

Calculated mortgage payment for a median priced home: $2,246

Median rent payment: $1,343

Home affordability deficit: -$1,509

Rent affordability deficit: -$605

Why are some towns so expensive?

Typically, people who live in more rural areas make less money than their urban counterparts, but they are also more likely to have a lower cost of living than those in urban areas. As a result, many towns are affordable, and, in some cases, they may be more affordable and have lower rates of poverty than cities.

But, as our data shows, there are many towns where home prices are as expensive, if not more expensive, than home prices in the country’s largest cities. Unfortunately, while home prices in these towns are as high as they would be in a big city, incomes are not.

While it may seem counterintuitive that there would be such a large supply of homes unaffordable for the majority of people in an area, it makes some sense since because many of the most expensive towns in the country are considered “resort” or “destination” towns. In other words, they are places where large numbers of people (usually wealthy) visit during certain times of the year.

For example, the Jackson area in Wyoming and Idaho is renowned for its luxury ski resorts and proximity to Yellowstone National Park. Vineyard Haven, Mass., is located on Martha’s Vineyard, a common vacation spot for the wealthy from nearby cities like Boston or New York.

Because many people who live in these towns do not live there year-round, and otherwise make the bulk of their income elsewhere, they can afford to buy homes well outside of the price range of the average townsperson. This demand for expensive luxury homes, as well as certain building restrictions in towns like Jackson, cause home prices to skyrocket and help lead to serious income and wealth inequality.

Though home affordability may be a challenge in many towns across the country, there are certain programs that can help make buying a home a more achievable goal. For example, USDA loans can help families living in rural areas avoid making a down payment on a home and get a lower interest rate on home loans. FHA loans are another option for families who are struggling to buy a home due to an insufficient amount of cash for a down payment or a weak credit score.

While these programs likely won’t make a $600,000 home affordable to a person making $30,000 a year, they should nonetheless be able to help many families who live in the towns featured in this study.

Methodology

All of the data used in this study comes from the 2017 American Community Survey 5-Year Estimates (the most recent survey which has the data necessary to perform this study). For the purposes of this study, we used micropolitan level data to approximate town level data.

When determining whether or not a home is affordable, we assume that an income earner will be able to afford a 20% down payment on the median home value in their area, and that they will receive a mortgage loan with a rate of 4.6% (the average rate offered to Americans). By using that data, we calculated the likely monthly payment and down payment for a median-priced home in a given micropolitan area.

We calculate an “affordable” monthly mortgage payment based on the “28% rule,” which says that a person should not spend more than 28% of their yearly gross salary on yearly costs related to housing. This rule, while not necessarily applicable to everyone, is useful for homebuyers to keep in mind, as it helps to ensure that they are not overspending on their home and leaving too little money for other expenses.

By subtracting the monthly housing payment that is affordable to an income earner in the geographies highlighted in our study from the calculated housing payment that would be required to purchase a home valued at the median level, we are able to determine whether or not an average townsperson can afford to purchase a home in the town that they live in.